Decision of the Court of Appeal (delivered by Justice Tay Yong Kwang):

Outcome:CoA dismisses appeal against High Court’s decision that freight forwarder which imported counterfeit goods was not liable for trade mark infringement

Pertinent and significant points of the judgment

Under the Trade Marks Act (“TMA”), “import” meant to bring or cause to be brought into Singapore and “export” meant to take or cause to be taken out of Singapore. This included goods that were brought into Singapore only on transit (at [74(a)]). The importer or exporter was the person who brought the goods or caused the goods to be brought into or out of Singapore respectively (at [74(b)]).

In order for a person alleged to have infringed trade mark to “use” a sign in the course of trade, in this case by importing or exporting goods under the sign, he must first know or have reason to believe that there was a sign on the goods. In such circumstances, it did not matter whether the person knew that the sign or its use was trade mark infringing (at [68]).

Background to the appeal

1 The appellants were trade mark proprietors of luxury brands, Burberry and Louis Vuitton. The respondent was a freight forwarder company which provided transhipment services in Singapore.

2 Counterfeit goods were shipped from China to Singapore with the respondent named as the local consignee. The goods were to be transhipped from Singapore to Indonesia but were seized by Singapore Customs before any transhipment could take place.

3 The appellants sued the respondent for trade mark infringement by way of importing and/or exporting the counterfeit goods under the TMA. The trial Judge found that the counterfeit goods were imported but that the respondent was not the importer. In addition, the counterfeit goods had not been exported because they had, having been seized by Singapore Customs, not left Singapore and an intention to export was insufficient. The trial Judge therefore dismissed the appellants’ claims. The appellants appealed against the trial Judge’s decision.

Facts

4 In March 2013, counterfeit goods which infringed the appellants’ trade marks (“the goods”) were shipped by Chinese companies from China to Singapore in two sealed containers intended for onward shipment to Batam in Indonesia. An Indonesian Company (“the third party”) requested the respondent to arrange for transhipment of the containers to Batam. For the purpose of transhipment, the respondent received packing lists and commercial invoices which described the contents of the first container as car accessories, fashion items, tools and hardware, and the contents of the second container as comprising car accessories, computer accessories, fashion items, household goods, tools and hardware. The relevant seaway bills and arrival notices for the containers named the respondent as the consignee.

5 During inspections of the cargoes upon arrival in Singapore, Singapore Customs found the cargoes to include counterfeit products totalling more than 15,000 items and seized the goods. It was not disputed that the respondent, as the freight forwarder, never saw what was contained in the sealed containers and there was no evidence to suggest that it was aware that it was forwarding counterfeit goods. The freight forwarder’s involvement in the transaction was only to receive the cargo from one country (China) and to forward it to another country (Indonesia).

6 The appellants, along with three other trade mark proprietors, commenced infringement of trade mark actions against the respondent in April 2013. They claimed that the respondent was liable under s 27(1) of the TMA, which provides that a person infringes a registered trade mark if he uses in the course of trade a sign which is identical with the trade mark, without the consent of the trade mark proprietor. In particular, the appellants relied on s 27(4)(c) of the TMA which states that a person uses a sign if he “imports or exports goods under the sign”.

7 The appeal raised two inter-related questions. First, to what extent does the TMA regulate goods in transit for the purposes of infringement, if such goods are never intended for the Singapore market? Second, assuming that goods in transit are caught by the infringement provisions in the TMA, who is to be held liable for such infringement?

Decision on appeal

8 The Court of Appeal held that under the TMA, “import” meant to bring or cause to be brought into Singapore and “export” meant to take or cause to be taken out of Singapore (at [74(a)]). The importer or exporter was the person who brought the goods or caused the goods to be brought into or out of Singapore respectively (at [74(b)]).

9 The Court of Appeal agreed with the trial Judge that the context and structure of the TMA were consistent with “import” encompassing goods brought into Singapore only for the purpose of transit (at [40]). This was because, amongst others, the acts considered as “use” for the purposes of trade mark infringement under s 27(4) of the TMA did not all require that the goods had to be intended for sale here or to be placed on the Singapore market. For example, the application of the infringing sign on goods or packaging, which would constitute “use”, did not require that the goods be intended for the Singapore market (see s 27(4)(a)). In addition, it was not evident from the TMA that its purpose was only to protect trade mark proprietors who marketed their trademarked products in Singapore (at [44]).

10 It was also held that a mere intention to export was insufficient for the purposes of s 27(4)(c) of the TMA (at [53]). However, where there were accompanying actions which were clearly directed at fulfilling the said intention to export or where there was clear evidence that export would definitely have taken place, there would be “export” under s 27(4)(c) of the TMA (at [54]). In this case, it was clear that the respondent would have shipped the goods out of Singapore to Batam if the Singapore Customs had not intervened (at [77]).

11 The Court of Appeal expressed the view that the need for effective enforcement of intellectual property rights had to be balanced against the over-extension of liability to honest commercial persons who happened to be tangentially involved in the movement or handling of counterfeit goods and who were wholly unaware of the existence of any infringing sign (at [27]). It held that in an infringement action under s 27 of the TMA, it was not enough that the defendant was responsible for the physical act of importing or exporting the infringing goods. To establish liability, the plaintiff also had to prove that the defendant intended to import or export goods under the signs and in particular that the defendant knew or had reason to believe that the signs were used on the goods (at [55], [68], [74(c)]). If this was established, it did not matter whether the defendant knew that the sign or its use were infringing. In addition, if he was aware or had reason to believe that the sign was present, it was not open to him to say that he could not see it because the goods were wrapped up in opaque packaging or kept in sealed packaging (at [55], [68], [74(c)]).

12 In this case, there was no evidence that the respondent knew or had reason to believe that there were signs on the goods (at [69]). The indications on the documents given to the respondent merely indicated household goods and other seemingly innocuous generic merchandise. There was no evidence that luxury products were included in the cargoes. There was also no evidence of any intention to import trademarked products. The facts surrounding the transactions showed that the respondent was merely providing a commercial service as freight forwarders in its ordinary course of business and nothing more. To impose liability for infringement of trade marks on the respondent in this factual situation would be against the letter and the spirit in s 27 of the TMA (at [70]).

13 The Court of Appeal also provided two final clarifications. First, if the freight forwarders were responsible for importing the goods into Singapore and exporting them out of Singapore, their knowledge and intention would be assessed separately at the time of import and the time of export (at [72]). This meant that even if they did not know or have any reason to believe that they were importing infringing goods, if events transpire during the goods’ transit in Singapore that put them on notice that their goods may be infringing ones, they took the risk of trade mark infringement if they nevertheless chose to export the goods (at [72]). Second, even if the freight forwarders were not liable for infringement, they had a duty to disclose any relevant information if they were in possession of counterfeit goods, based on the recent amendments to the TMA in the form of the Intellectual Property (Border Enforcement) Act 2018 (No 34 of 2018) (at [73]).

14 The appeals were therefore dismissed with costs.

This summary is provided to assist in the understanding of the Court’s grounds of decision. It is not intended to be a substitute for the reasons of the Court. All numbers in bold font and square brackets refer to the corresponding paragraph numbers in the Court’s grounds of decision.